CLOSE-UP: LIVE ISSUE/DIGITAL RADIO - How will digital shape advertising on the airwaves? John Naughton discusses why the RAB needs to have an initiative for digital radio

Three years ago, a Harvard professor named Clayton Christensen published The Innovator's Dilemma and, in the process, caused massive sleep deprivation among corporate executives worldwide. The book's subtitle - when new technologies cause great companies to fail - explains why. Christensen looked at the ways in which even smart, well-managed, wealthy corporations have been undermined by technical developments - and, in particular, by their inability to distinguish between technologies that were 'sustaining' and those that turned out to be 'disruptive'.

Three years ago, a Harvard professor named Clayton Christensen published The Innovator's Dilemma and, in the process, caused massive sleep deprivation among corporate executives worldwide. The book's subtitle - when new technologies cause great companies to fail - explains why. Christensen looked at the ways in which even smart, well-managed, wealthy corporations have been undermined by technical developments - and, in particular, by their inability to distinguish between technologies that were 'sustaining' and those that turned out to be 'disruptive'.

As radio goes digital, that distinction is set to become crucial for UK media businesses. Since the 20s, radio has been defined by its delivery mechanism (analogue signals broadcast through the ether). But we are about to enter an era when radio will be delivered (and received) via a plethora of routes, and when the possibilities for interaction between listeners and transmitters will be transformed by digital technologies. We don't know the implications of these developments, but only a fool would assume that it will continue to be business as usual.

To add to the confusion, there's a host of new technologies on the way.

There's Digital Audio Broadcasting (DAB), for example, which has been an eternity in gestation and has yet to make a significant dent in the consumer market. But already there's lots of digital broadcasting going on, even if nobody's listening yet.

Then there's the looming giant, the internet, with its burgeoning technology for streaming audio signals. There are something like 10,000 radio stations streaming their content to listeners all over the world and new ones are added every day.

And there are offbeat outfits such as Command Audio, offering what can only be described as audio on demand. Using their proprietary receiver, listeners can pause, rewind and store radio programmes, design their own playlists and do a host of other things you never thought of doing with Radio 4. Elsewhere, researchers are using collaborative filtering to determine your musical tastes and creating software to beam similar stuff at you. Motorola already sells a mobile phone complete with an integral FM radio. One day it will have an onboard DAB receiver - or something even more exotic.

Behind all these developments lie far-reaching changes in our communications infrastructure. Despite BT's best efforts, we are inexorably moving from an era of low-bandwidth, dial-up internet links to one in which millions of listeners will have always-on, broadband connections. We know from research experience that people's behaviour alters radically when they have these kinds of links to the net. Once the dial-up bottleneck is removed, for example, they are much more likely to look up things online rather than consult a directory. They download a lot of MP3 files and they are more partial to streaming audio.

Somewhere in this technological maelstrom lies the future of radio.

Or, perhaps, one should say the futures of radio, for it is unlikely that our existing monolithic concept of the medium will survive such radical transformations in its delivery mechanisms. Which of the new technologies is likely to be 'sustaining' in Christensen's terms? And which will prove disruptive - lethally undermining even the best-laid business plans?

The truth is that nobody knows at present. Similarly, no-one knows what kinds of advertising will work best in an interactive world, where listeners can demand personal content and can be more precisely targeted for marketing purposes. How will industries conditioned by 'push' technology adapt to a new-media ecology dominated by exactly the opposite - a 'pull' medium such as the web - where nothing comes to you unless you identify it and pull it from the server?

The Radio Advertising Bureau's RAB-eye initiative, which I joined as the chairman last week, was conceived as an informal think-tank to make sense of the digital cornucopia and act as an intelligent filter for the industry as it tries to come to terms with the changes now in train. It will have an editorial board of technological and media experts which will commission and publish research and act as a clearing house for information about digital technologies as they affect the radio and ad industries.

We have lived for so long under the influence of television that we forget that it was radio which pioneered broadcasting in the 20s. (The acronym WWW - for world wide wireless - was the logo for RCA from 1920-27.) 'By using radio,' Ward Hanson of Stanford University wrote in a study of the early days of the medium, 'it was possible to accelerate the economy's push to a mass market. National brands could be created and sold. A company could launch marketing campaigns simultaneously, backed with a nationally created image.' Radio, in other words, was the medium that created scheduled mass culture.

Digital technologies threaten to undermine all that. When you order a computer from Dell, the manufacturing process doesn't begin until after you have clicked 'submit'. The machine is then built to your specifications.

Some automobile manufacturers are working towards the same goal. The age of mass production of physical goods is metamorphosing into an era of mass customisation or personalised production. If this can happen with cars and computers, why not with information and entertainment media?

And if it does, it will be radio, not television, that leads the charge.

The medium that invented broadcasting is likely to be the one which reveals what comes next. If you want to see the future, listen in.



John Naughton is an academic and a journalist. He was The Observer's award-winning television critic for nine years and writes a weekly column about the internet for the paper. A Brief History of the Future, his book on the origins and significance of the internet, is published by Phoenix. For more information about RAB-eye, visit www.rab.co.uk.



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